Health Insurance Exchanges—What’s in Store for the Future?: March 2012

Imagine avoiding the hassle of renewing your health insurance: no more hours of research, comparing carriers, filling out paperwork and inevitably ending up changing carriers each year just to stay competitive with rates. Now imagine the new option: type your name, birth date and zip code into a website and in a few minutes you have several plans available for your choosing, each set up with tiers according to price. This is actually possible today for those in Massachusetts or Utah who may be looking for health insurance coverage. And in two years this could be available to everyone in the United States, through an option called Insurance Exchanges. The Exchanges will be available at online marketplaces, so people can compare plans, and each will be grouped into tiers: bronze, silver, gold and platinum. It could actually be against the law to not have insurance (certain exceptions apply of course); those that do not comply with the law will face large penalties. The idea of an insurance mandate is being challenged in the courts and likely will be decided by the U.S. Supreme Court by next year. In 2014 over 16 million people will be using online trading posts to search for insurance coverage, and it is estimated that by 2020 there could be as many as 31 million people taking advantage of the exchanges. One fact that sets this apart from other options made available in the past is the fact that insurers will not be able to deny any person coverage because of poor health. In addition, insurers will have to justify all price increases in order to get approval from the Exchange Board. There is a lot of work to be done on this venture, because state lawmakers need to decide who will offer the exchanges, who will run them and how they will work with insurers. Options for those who could run the exchange would be a state agency, an independent government entity or a non-profit organization. If the State runs it, there needs to be a board of health insurance experts (no doctors or insurers due to a conflict of interest). This board will have to compete in the private insurance market so they must be able to make decisions quickly and be easily accessible to the public.In order to create the exchanges, it is expected to cost $4.4 billion nationwide. State leaders will be required to submit a “functioning” exchange by January 2013 to the U.S. Department of Health and Human Services. If the State is unable to accomplish this by the deadline, a federally established exchange will be put in place. This reform was passed to insure more Americans; in 2014, millions of people will be insured for the first time. Some will qualify for subsidies, others for an expanded Medicaid program. But the people that will benefit the most will be those that are self-employed, unemployed or employed by a company that doesn’t offer benefits to their employees. The concept of Insurance Exchanges being readily available to everyone by 2014 sounds very complicated, and is rightly so, but the National Association of Insurance Commissioners and the U.S. Department of Health and Human Services are working closely with each other on these important insurance issues. The concept of the insurance exchange going nationwide is what’s in store for the future, and that future is just around the corner.